SEEP 2015Arlington, VirginiaOctober 1, 2015

Insuring Farm and Family: Innovative Risk Management Strategies in Developing Markets

Pact Global Microfinance Fund

PGMF Beneficiary Welfare Fund

• The Institution• The Product• What’s Covered• How it Works• Challenges• Possible Changes

Jason S. Meikle, Deputy Director, PGMF

U Aung Naing BWP Manager, PGMF

Largest and oldest MFI in Myanmar

Over 650,000 clients – 98% of whom are women

Over $100 Million in loans outstanding – about $165 per client

90 locations in 51 out of 320 townships – 97% in rural areas

Pact Global Microfinance Fund

The Beneficiary Welfare Program• Clients face conditions detrimental to their

livelihoods that they can’t control, such as death and natural disaster.

• Micro-insurance is provided for in the 2012 law on microfinance, but has not been “activated” yet by the regulator.

• PGMF provides quasi-insurance through a mutual fund• Clients pay 1% of each loan disbursed• PGMF contributes 1% of monthly revenue• PGMF makes an additional annual contribution of 15%

of the fund balance• Funding split is generally 60:40 clients: PGMF

• Claims can be for loan write-off, cash assistance, or both depending on the nature of the claim.

CoverageClient Death:$75 cash assistance plus loan write off

Natural Disaster:Maximum $36 cash assistance based on lost property; loan write off only if business affected

Livestock Epidemic:Loan write-off if loan used for animal purchase

Loss of Fishing Nets:Loan write-off if loan used for net purchase or manufacture

Childbirth:$23 for village birth$36 for hospital birth$75 for C-Section

ProcessClient pays 1% of loan value at disbursement

Client receives cash assistance and/or loan write-off

Client’s house burns down—business may also be affected

PGMF staff verify the loss and propose action

Management signs off

Challenges

• Childbirth Benefit introduced in 2013 is extremely popular, brings in new clients, but makes up 70% of the Dollar value of claims, significantly reducing the fund’s growth rate.

• 2015 Floods have shown that institution-wide events can have a major impact on the long term viability of the self-insured model.

Possible Changes

• Revisit childbirth benefit• Revisit premium structure• New benefits?

• Life coverage for additional family members• Increased coverage• Limited health insurance—specific treatments

• Development of micro-insurance, regulation permitting

THANK YOU!